Green companies in California may lose tax breaks

State Treasurer Bill Lockyer is taking steps to tighten up a $100 million tax break for alternative energy companies in California.

Solyndra has been by far the biggest recipient, getting $34.5 million, but at least 15 other Bay Area firms have also taken advantage of it including Nanosolar and Stion Corp. of San Jose, and Alta Devices, Calisolar and Bloom Energy, all of Sunnyvale. Now, no more of these applications are being approved or even accepted.

Solyndra's bankruptcy is forcing leaders to question whether it's appropriate to use taxpayer money on emerging technologies. Not only did the solar manufacturing company get more than a half-billion dollars in federal loans, the state of California gave it millions in tax breaks.

A board that administers the tax breaks took the first steps to suspend them while it looks at ways it can tighten the qualifications. Green companies and projects in California are eligible for a 3-year sales tax exemption for buying manufacturing equipment. Solyndra had used $25 million of the $34 million that was approved.

State Senator Alex Padilla pushed through the tax break last year.

"I think it's worthy of a time-out, a re-assessment, are we doing of everything we can to vet those companies, to do proper due diligence before we invest taxpayer money into their operations," he said.

Steve Maviglio with Californians for Clean Energy and Jobs says, "Solyndra has been a black eye on the entire industry."

The solar industry thinks it is a bad idea to suspend the tax breaks which helped create 650 jobs so far, and cement California's hold as one of the country's solar manufacturing leaders.

"This is a growing business and with any growing business, there's going to be companies that fail and succeed. 95 percent of them are succeeding. So, why are we penalizing an industry that's creating jobs because of the fault of one company?" Mayiglio asked.

Although it is essentially in effect now, the board will formally vote on suspending the tax breaks next month. It is unlikely California taxpayers will see any of the $25 million they gave the Fremont company, but the board will look at Solyndra's application with a fine tooth comb to see if there are any "misrepresentations" the state can use as a basis for a lawsuit to recoup some money.